StealthGas Inc announces the sale of the Gas Fortune, the Gas Natalie and the Gas Eternity, the cancellation of the purchase and bareboat charter of the Stealth Argentina, plus new charter arrangements for the Gas Cathar, the Gas Defiance and the Gas Shanghai.
ATHENS, GREECE, January 26, 2010. STEALTHGAS INC. (NASDAQ: GASS) (the âCompanyâ), a ship-owning company serving primarily the liquified petroleum gas (LPG) sector of the international shipping industry announced today that on December 9, 2009 it completed the sale of the Gas Fortune, a 1995 built 3,500 LPG carrier to an unaffiliated entity based in the Far East. On January 15, 2010 the Company completed the sale of the Gas Natalie a 1997 built 3,213 cbm LPG carrier to an unaffiliated entity based in the Far East. On December 31, 2009 the Company signed a Memorandum of Agreement to sell the Gas Eternity a 1998 built 3.500 cbm LPG carrier to an unaffiliated entity based in the Far East. Delivery of this vessel to itâs new owner is expected at the end of April 2010 upon the expiry of her existing bareboat charter.
The aggregate sale price for these three vessels is approximately $20.0 million and will result in a net inflow of cash to the Company of approximately $14.3 million after the repayment of debt associated with the Gas Eternity and commission expenses.
As a result of these sales either concluded or agreed during the fourth quarter of 2009 the Company will incur a non-cash loss from sales/impairment of $9.8 million, this will be reflected in the Companyâs fourth quarter results to be announced in February 2010.
The Company also announced following protracted negotiations with the seller of the Stealth Argentina in regard to various technical deficiencies identified in the design of the vessel that it has entered into an agreement to cancel both the purchase of the vessel and the three year bareboat charter that was to commence upon the vesselâs delivery. In consideration of the agreement the Company will pay the sum of $10,750,000 to the seller on top of the already paid deposit.
The Company also announced the following new charter arrangements:
Commencing from October 29, 2009 the Gas Cathar began a time charter for between 20 to 50 days to an International Gas Trader. This was subsequently extended for thee months from the 16th December 2009.
Commencing from 11th January 2010 the Gas Defiance extended her existing time charter for a further 12 months to a far eastern gas company.
Commencing from the beginning of January 2010 the Gas Shanghai began a new one month time charter to a national oil and gas company.
The average time charter equivalent rate for the above three charters is $322,333 per calendar month or $10,635 per day.
CEO Harry Vafias commented:
âThe sale of the three above mentioned ships is I believe a prudent measure as it bolsters the liquidity resources of the Company as we move into what I believe will be a further challenging year in 2010 plus it reduces our level of debt. It is obviously disappointing to incur losses on these sales, but they reduce our exposure to the spot market in which two of the vessels were already trading and the Gas Eternity would probably have entered into in May. Moreover these are three of our smallest and oldest pressurized gas ships and we want to maintain a low average age especially after the deliveries of the 5 new buildings that will join the fleet in 2011 and 2012. We will also reduce our dry docking expenditure in 2010 through the sale of the Gas Fortune.
The agreement reached with the sellers of the Stealth Argentina is again I believe a prudent move on the part of the Companyâs management. I fully acknowledge that the taking of a loss is disappointing but this must be considered in the light that after reviewing the design of the vessel and taking third party advice we developed serious reservations regarding the operational design of the vessel. We will also now avoid adding some $43 million of debt to our balance sheet against a ship with a current market value far lower than this, and due to the change of bareboat charterer, because of adverse market factors, a bareboat charter rate that was just break even in its initial years. This decision was not taken lightly, but it underlines our desire to maintain our conservative financial structure by removing a significant amount of new debt we were projecting to incur, it will reduce future interest expense and it removes a potentially non accretive asset, with possible impairment issues going forward, from our fleet.
Finally we are pleased to announce further period charters which are similar in value to those we announced in November which further underline the relative steadiness of our core business in its mainstream time charter sector, and quite a significant improvement in current market conditions in our core LPG sector in the last few weeks.â
Fleet Profile and Fleet Deployment:
The table below shows the Companyâs fleet development and deployment as of today:
LPG Carrier Fleet
Product Tanker Fleet
â¢Â Â Â F.P.: Fully-Pressurized
â¢Â Â Â S.R.: Semi-Refrigerated
â¢Â Â Â M.R.: Medium Range
(1)Â Â Â Earliest date charters could expire.Â Most charters include options to shorten or extend their term.
(2)Â Â Â From mid-January 2010 the Gas Zael will commence a new 12 month time charter to an oil major
(3)Â Â Â The Charterer of the Gas Evoluzione had the option of extending this charter for a further year upon its expiry in April 2010 but this was not exercised.
(4)Â Â Â Gas Eternity has for the duration of its bareboat charter been renamed the M.T. Yu Tian 9. The vessel is expected to be delivered to her new owners at the end of April 2010.
About STEALTHGAS INC.
Headquartered in Athens, Greece, STEALTHGAS INC. is a ship-owning company primarily serving the liquified petroleum gas (LPG) sector of the international shipping industry.Â STEALTHGAS INC. currently has a fleet of 38 LPG carriers with a total capacity of 170,286 cubic meters (cbm) and three M.R. product tankers.Â In addition, the company has entered into an agreement to sell the Gas Eternity at the end of April 2010 plus agreements to acquire five new building LPG carriers with expected delivery from February 2011 through May 2012. Once this sale and acquisitions are completed, STEALTHGAS INC.âS fleet will be composed of 42 LPG carriers with a total capacity of 196,786 cubic meters (cbm) and three M.R. product tankers with a total capacity of 140,000 deadweight tons (dwt).Â STEALTHGAS INC.âS shares are listed on the NASDAQ Global Select Market and trade under the symbol âGASSâ.
Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, managementâs examination of historical operating trends, data contained in our records and other data available from third parties. Although STEALTHGAS INC. believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, STEALTHGAS INC. cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, charter counterparty performance, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled dry dockings, changes in STEALTHGAS INCâs operating expenses, including bunker prices, dry-docking and insurance costs, ability to obtain financing and comply with covenants in our financing arrangements, or actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.
Risks and uncertainties are further described in reports filed by STEALTHGAS INC. with the U.S. Securities and Exchange Commission.
Visit our website at www.stealthgas.com
Andrew J. Simmons
Chief Financial Officer